Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 1 of 8

.UNITED
STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

ACE AMERICAN INSURANCE $

COMPANY $
s
Plaintiff, $
v. S Civil Action No.4:10-cv-02931
$ JurY
M-I, L.L.C. $ JUDGE KEITH P. ELLISON
$
Defendant. s

ACE AMERICAN INSURANCE COMPANY'S ANSWER TO

M-I. L.L.C.'s COUNTERCLAIM

TO THE HONORABLE JUDGE OF THE COURT:

COMES NOW, ACE American Insurance Company ("ACE") and files this its Answer to

Defendant/Counter-Plaintiff s M-I, L. L. C.' s ("M-I") Counterclaim.

L
RnspoNsB ro M-I's St.lrnn{nNr or THn CA,sB

i. ACE denies the allegations set forth in Paragraph 1 of M-I's Answer and

Counterclaim, and fuither states that ACE's coverage position, as set forth in its coverage letters

and the Original Complaint, is firmly established in the terms, conditions and provisions of the

contracts of insurance issued by ACE to M-I.

2. ACE denies the allegations set forth in Paragraph 2 of M-I's Answer and

Counterclaim.

3. With respect to Paragraph 3 of M-I's Answer and Counterclaim: (a) ACE admits

that M-I is "seeking a determination of coverage for specific Deepwater Horizon claims under

the applicable policies"; (b) ACE also admits that M-I has asked "the Court to place this case on

a fast-track for resolution" (a request that ACE joins); (c) ACE is without sufficient knowledge

to affirm or deny M-I's assertion that it "needs guidance from the Court so that it can effectively
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 2 of 8

defend against and resolve themaze of Deepwater Horizon claims" and ACE denies that it is the

function of this Court to guide the parties to litigation; and (d) ACE denies the remaining

allegations set forth inParagraph 3 of M-I's Counterclaim.

il.
ANswnR to tun Covrpr,nrNr ron Dncl¿,RaroRv JuocivrnNr
4. ACE makes no response to Paragraphs 4 though 63 of M-I's Answer and

Counterclaim, and no response is permissible under FRCP 7(a).

IIr.
ACE's Rnspoxsr to "Factual BacxcRouNo"

5. In response to Paragraph 64 of M-I's Answer and Counterclaim, ACE admits that

"BP retained the mud engineering services of M-I to be performed in accordance with a written

contract entitled "Contract for Gulf of Mexico Strategic Performance Unit Offshore Well
Services between BP Exploration and Production, Inc. and M-I, L.L.C. (the 'BP/MI
Agreement'). The services under the BP/MI Agreement included, among other things, that M-I

devise and prepare a mud program for the Macondo Discovery Well." ACE denies the
remaining allegations set forth in Paragraph 64 of M-I's Answer and Counterclaim.

6. In response to Paragraph 65, ACE admits that lawsuits were filed against M-I

related to the Deepwater Horizon Incident (as that term was defined in Paragraph 1.1 of ACE's

Complaint for Declaratory Judgment). ACE denies the remaining allegations set forth in

Paragraph 65 of M-I's Answer and Counterclaim.

l. ACE admits the allegations set forth in Paragraph 66 of M-I's Answer and

Counterclaim.

8. ACE denies the allegations set forth in Paragraph 67 of M-I's Answer and

Counterclaim.
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 3 of 8

9. In response to Paragraphs 68 and 69 of M-I's Answer and Counterclaim, ACE

admits that it issued certain insurance policies to M-I, and the policies at issue in this litigation

are identified as Policy No. HDO G 24940354 (Comprehensive General Liability policy) and

WLR C 46132403 (Workers' Compensation and Employers Liability policy). These policies are

attached hereto as Exhibits A and B respectively. ACE is without sufficient knowledge to affirm

or deny the remaining averments in Paragraphs 68 and 69 of M-I's Answer and Counterclaim.

10. In response to Paragraph 70 of M-I's Answer and Counterclaim, ACE responds

that the terms of the applicable policies govern its obligations. ACE denies the remaining

averments inParagraph 70 of M-I's Answer and Counterclaim.

11. In response to Paragraph 71 of M-I's Answer and Counterclaim, ACE admits that

M-I properly quoted a portion of the "Insuring Agreement" of Policy No. HDO G 24940354.

ACE denies the remaining averments in Paragraph 7l of M-I's Answer and Counterclaim. In

order to fairly respond to the substance of the allegations, ACE observes that ACE does not have

a duty to defend under the ACE Comprehensive General Liability Policy and M-I is referred to

Endorsement # 14 which provides, in pertinent part, that ACE "shall have no duty to defend any

'suit', claim or proceeding arising out of or in any way related to 'pollution'."

12. In response to Paragraph 72 of M-I's Answer and Counterclaim, ACE responds

that the terms of Policy No. WLR C 46132403 govem its obligations. ACE denies the remaining

averments in Paragraphl2 of M-I's Answer and Counterclaim.

13. In response to Paragraph 73 of M-I's Answer and Counterclaim, ACE responds as

follows: (a) ACE admits that M-I has quoted portions of the policies referenced in Paragraph 9

above and (b) ACE denies the remaining allegations in Paragraph 13 of M-I's Answer and

Counterclaim.
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 4 of 8

14. ACE denies the averments in Paragraph 74 of M-I's Answer and Counterclaim.

15. ACE denies the averments in Paragraph 75 of M-I's Answer and Counterclaim.

16. ACE denies the averments in Paragraph 76 of M-I's Answer and Counterclaim.

17. ACE denies the averments in Paragraph 77 of M-I's Answer and Counterclaim.

18. ACE denies the averments in Paragraph 78 of M-I's Answer and Counterclaim.

19. ACE denies the averments in Paragraph 79 of M-I's Answer and Counterclaim.

20. In response to the averments inParagraph 80 of M-I's Answer and Counterclaim,

ACE admits that itreceived an email from Kendell Cofferto Alison Walzand Rodger Lewis

dated July 2,2010, but ACE denies the remaining allegations set forth in Paragraph 80.

21. In response to the averments in Paragraph 8l of M-I's Answer and Counterclaim,

ACE admits that M-I properly quoted Ms. Walz' e-mail of July 6, 2010. ACE denies the

remaining allegations set forth in Paragraph 8l of M-I's Answer and Counterclaim.

22. ACE admits the allegations set forth in Paragraph 82 of M-I's Answer and

Counterclaim.

23. ACE denies the allegations set forth in Paragraph 83 of M-I's Answer and

Counterclaim.

24. ACE denies the allegations set forth in Paragraph 84 of M-I's Answer and

Counterclaim.

25. ACE admits that it did not attend the meeting requested by Chartis. ACE denies

the remaining allegations set forth in Paragraph 85 of M-I's Answer and Counterclaim.

26. In response to the allegations set forth in Paragraph 86 of M-l's Answer and

Counterclaim, ACE admits that it received a letter from Gregory M. Attrep, Sr. Litigation
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 5 of 8

Counsel, to Alison Walz dated August 11,2010, but ACE denies the remaining allegations set

forth in Paragraph 86 of M-I's Answer and Counterclaim.

27. ACE admits that ACE: (a) filed a Complaint for Declaratory Judgment in this

matter; (b) transmitted coverage letters to Kendell Coffer; and (c) sent a copy of the Complaint to

Mr. Coffer. ACE denies the remaining allegations set forth in Paragraph 87 of M-I's Answer

and Counterclaim.

IV.
ANswnn ro M-I's CouNrnRcr,¡¡nn

28. ACE admits the averments set forth in Paragraph 88 of M-I's Answer and

Counterclaim.

29. ACE admits that it issued the insurance policies identified in Paragraph 89, and

that ACE's obligations are as set forth in those contracts. ACE denies the remaining averments

in Paragraph 89 of M-I's Answer and Counterclaim.

30. ACE denies the allegations set forth in Paragraph 90 of M-I's Answer and

Counterclaim.

31. ACE admits that the bases for ACE's declination of coverage under

Comprehensive General Liability Insurance policy number HDO G 24940354 are as set forth in

Exhibit A. ACE denies the remaining allegations set forth in Paragraph 91 of M-I's Answer and

Counterclaim.

32. ACE denies the allegations set forth in Paragraph 92 of M-I's Answer and

Counterclaim.

33. ACE denies the allegations set forth in Paragraph 93 of M-I's Answer and

Counterclaim.
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 6 of 8

34. ACE denies the allegations set forth in Paragraph 94 of M-I's Answer and

Counterclaim.

35. In response to Paragraph 95 of M-I's Answer and Counterclaim, ACE admits that

"BP is an additional insured under the ACE Policy by virlue of the terms, conditions, and

limitations contained in the BP/MI Agreement and in accordance with the terms and conditions

of the ACE Policy" (HDO G 24940354) as stated in Paragraph 5.4 of the Complaint. ACE

denies the remaining allegations set forth in Paragraph 95 of M-I's Answer and Counterclaim.

36. ACE denies the allegations set forth in Paragraph 96 of M-I's Answer and

Counterclaim.

37. ACE denies that the quoted language in Paragraph 9l of M-I's Answer and

Counterclaim is an operative paragraph of the ACE Policy in this litigation.

38. ACE denies the allegations set forth in Paragraph 98 of M-I's Answer and

Counterclaim.

39. ACE denies the allegations set forth in Paragraph 99 of M-I's Answer and

Counterclaim.

40. ACE denies the allegations set forth in Paragraph 100 of M-I's Answer and

Counterclaim.

4I. ACE denies the allegations set forth in Paragraph 101 of M-I's Answer and

Counterclaim.

42. ACE denies the allegations set forth in Paragraph 102 of M-I's Answer and

Counterclaim.

43. ACE denies the allegations set forth in Paragraph 103 of M-I's Answer and

Counterclaim.
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 7 of 8

44. ACE denies the allegations set forth in Paragraph 104 of M-I's Answer and

Counterclaim.

45. ACE denies the allegations set forth in Paragraph 105 of M-I's Answer and

Counterclaim.

46. ACE denies the allegations set forth in Paragraph 106 of M-I's Answer and

Counterclaim.

41. ACE denies the allegations set forth in Paragraph 107 of M-l's Answer and

Counterclaim.

48. ACE denies the allegations set forth in Paragraph 108 of M-I's Answer and

Counterclaim.

49. ACE denies the allegations set forth in Paragraph 109 of M-I's Answer and

Counterclaim.

50. ACE denies the allegations set forth in Paragraph 110 of M-I's Answer and

Counterclaim.

51. As to Paragraph 111 of M-I's Answer and Counterclaim, ACE makes no response

to this assertion as it is a legal argument for which no response is necessary.

52. ACE denies all relief sought in the Section X, entitled "Ptayef' of M-I's Answer

and Counterclaim.

v.
Arrmiuarrvn DnrnNsns ro M-I's CouNtnRcl¿.rvr

53. ACE affirmatively pleads, should such be necessary, waiver and estoppel.
 Case 4:10-cv-02931 Document 15 Filed in TXSD on 09/10/10 Page 8 of 8

Respectfully submitted,

BnowN Srvrs, P.C.

By: /s/ Kenneth G. Engerrand

Kenneth G. Engerrand
Texas Bar No. 06619500
Southern District LD. 207 8
Charles Clayton Conrad
Texas Bar No. 24040721
Southern District l.D. 31 220
Michael A. Vamer
Texas Bar No. 20499425
Southern District I.D. 15111
1177 West Loop South, Tenth Floor
Houston, Texas 77027
Telephone: 7 13-629-1580
Facsimile: 7 13-629-5027

for Pløintíff/Counter D efendønt

Attorneys
ACE American Insurønce Compøny

CERTIFICATE OF SERVICE

I hereby certify that on September 10, 2010, I electronically filed the foregoing document
with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being
served this day on all counsel of record identified on the attached Service List in the manner
specified, either via transmission of Notices of Electronic Filing generated by CÌ\4/ECF or in
some other authorized manner for those counsel or parties who are not authorized to receive
electronically Notices of Electronic Filing.

Ms. Samantha Trahan

Mr. J. James "Jim" Cooper
Mr. Geoffrey H. Bracken
GnRosRs WyrrrN¡ SswEU- LLP
1000 Louisiana, Suite 3400
Houston, Texas 77 002-5011

Mr. Christopher C. Loeber

MoRceN, LEwrs & BocKrus,LLP
502 CamegSe Center
Princeton, NJ 08540-6289

/s/ Kenneth G. Eneerrand

Kenneth G. Engerrand